Venkatachaliah, J. - (1.) These four petitions for grant of special leave arise out of the orders of the High Court of Judicature at Madras in the corresponding four Tax case Petitions rejecting the assessee's applications under Section 256(2) of the Income-tax Act, 1961 and the reference of a question of law whether the disallowance under Section 40(b) of the Income-tax Act, 1961 (Act) of the interest paid by the firm to its partner should be the gross amount of such interest or should be confined to,the net-amount after setting off the interest, in turn, paid by the partner to the firm on his borrowings from the firm.
(2.) In each of these cases the Income-tax Appellate Tribunal had, in substance, held that what was disallowable was the entirety of the interest paid by the firm to the partner without reference to any interest that may, in turn, have been paid by the partner to the firm. The Tribunal in the appeals preferred by the Revenue before it, allowed the appeals and reversed the view to the contrary taken in favour of the assessee by the first-appellate authority. The Tribunal also declined to state a case and refer a question of law under Section 256(1) of the Act to the High Court; whereupon the assessees moved the aforesaid Tax Case Petitions before the High Court under Section 1256(2). The High Court rejected these applications on the view that there was no question of law arising out of the appellate orders of the Tribunal, having regard to the earlier pronouncement of the High Court in CIT v. O.M.S.S. Sankaralinga Nadar and Co., 147 ITR 332 (Mad) on which the Tribunal had relied.
(3.) The correctness of the decision of the High Court in the said Sankaralinga Nadar's case (supra) has come to be examined by this Court in Keshavji Ravji and Co. v. CIT (Special Leave Petition No. 14291/ 1985 and connected cases) and, by the Judgment dated January, 1990, this Court has taken a view in the light of which Sankaralinga Nadar and Co.'s case (supra) cannot be held to have laid down the law correctly in all respects. The pronouncement of this Court in the said Keshavji Ravji and 1 Co.'s case (supra) covers the point raised in these Special Leave Petitions.;